ANALYSIS OF THE FY 2010 INTERNATIONAL AFFAIRS BUDGET REQUEST 1 -JULY 2009-

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1 ANALYSIS OF THE 2010 INTERNATIONAL AFFAIRS BUDGET REQUEST 1 -JULY Joseph C. Whitehill, Analyst The Obama Administration has requested $53.9 billion for International Affairs in its 2010 budget request. This request is a 26 percent increase over the last administration s 2008 budget request and a 27 percent increase above the amount appropriated for International Affairs for 2009, before taking supplemental appropriations into account. 2 With this request, the administration is taking the first step toward its commitment to double foreign assistance by The Stimson Center has carried out a detailed analysis of this request, including the international affairs funding provided in the recently-passed 2009 supplemental appropriations act, with the following highlights: The $53.9 billion request for discretionary programs in International Affairs constitutes 4.7% of the President s proposed discretionary budget. The request would increase spending on foreign assistance across nearly all objectives and program areas. Funding for economic growth and governance objectives would benefit from the highest rate of growth, increasing by 43 and 25 percent respectively over The recently-passed 2009 supplemental provided an additional $15.4 billion for International Affairs, $8.3 billion more than the administration requested. At least $2 billion of those supplemental funds are actually for programs requested in the President s 2010 budget. The congressional decision to move the $2 billion in funding into the supplemental will help fill the gap in the 2010 budget between the funds the President requested and the lower level of funding provided in Appropriations (302b) allocations to the State/Foreign Operations subcommittees. An additional $5 billion corresponds to a rescoring of the Administration s 2010 request for an International Monetary Fund quota increase. Although multilateral assistance spending through international organizations and the multilateral development banks would increase in 2010, the budget reflects continuation of a long-term trend toward lower funding for multilateral activities as a share of overall US foreign 1 This report is based on research funded in part under contract with the Henry J. Kaiser Family Foundation, and reflects contributions by Gordon Adams, Eric Lief, Rebecca Williams, David Glaudemans and Mary Kate Mohlman. 2 The Omnibus Appropriation for 2009, the 2009 Bridge Supplemental, and the Recovery Act provided $42.3 billion for International Affairs and the 2009 Emergency Supplemental Appropriations bill provided $15.4 billion for a total of $57.7 billion. There is a 6.6 percent decrease from 2009 to 2010 if both the enacted and the supplemental are considered.

2 Budget : International Affairs policy spending. As US International Affairs spending has increased over the last decade, growth for bilateral tools has predominated. The President s budget does not reverse this trend. The President s budget seeks significant funding growth for diplomatic and development operations. Both State and USAID would be able to increase their core diplomatic, development, and training capacities. The State Department would also increase its support and Diplomatic Security staffs. The request would significantly increase the civilian response capabilities of the State Department, with an additional $323 million for Civilian Stabilization Initiative and the creation of two contingency funds for rapid response ($76 million for the Rapid Response Fund in USAID and $40 million for the Stabilization Bridge Fund as a part of the Economic Support Fund account). The request takes important steps to correct the previous practice of under-funding core International Affairs accounts and seeking to make up the difference through supplemental requests. In particular, the request for humanitarian relief and food aid accounts are roughly $470 million higher than the 5-year average funding for these accounts, more than fully funding these requirements. Similarly, the 2010 budget request would fully fund US commitments to international organizations and peacekeeping activities, rather than seeking to make up shortfalls through supplemental requests. Overall, economic/humanitarian assistance is slated to double during the timeframe. Health programs receive significant support in this budget, a 15 percent increase over The White House has announced the President s plan to request $63 billion over six years for global health. The request would greatly increase resources for Afghanistan and Pakistan, but, reflecting the shift in policy priorities, would reduce funding for Iraq, aside from counter-narcotics funding. While security assistance programs appear to have relatively flat funding in the international affairs account, the parallel architecture of economic and security assistance provided through the Department of Defense (DOD) continues to grow.

3 Joseph C. Whitehill 3 Overview 2010 BUDGET REQUEST: INTERNATIONAL AFFAIRS The Obama Administration has requested $53.9 billion for discretionary programs within the International Affairs function for 2010, and projects seeking $313 billion over the five-year period fiscal years 2010 through The International Affairs budget represents 4.7% of the President s proposed discretionary budget. 3 Function Budget : Function 150 International Affairs ($ in billions) $42.9 $42.3 $15.4 $57.7 $53.9 % From 2008 to % % From 2009 to % It would be a misinterpretation to see the 2010 request as a reduction from Congress provided $15.4 billion for International Affairs in the 2009 emergency supplemental appropriations bill, technically $8.3 billion more than the President originally requested, bringing total 2009 Function 150 appropriations to $57.7 billion. If compared to this total, the 2010 budget request would appear to be a $3.8 billion decrease. However, the funds appropriated in the recent supplemental actually remain available for 2010, increasing the overall available resources for international affairs in that year. Moreover, as much as $2 billion of the supplemental appropriations are actually funds requested in the 2010 budget, including $965 million for Foreign Military Financing (FMF), $336 million for State Department Diplomatic and Consular Programs (D&CP), and $700 million for Pakistan (Pakistan Counterinsurgency Fund). An additional $5 billion corresponds to a CBO rescoring of the Administration s 2010 request for an International Monetary Fund quota increase. This forward funding in 2009 of part of the 2010 request could make up for the gap in the 2010 budget created by the congressional Budget Resolution and the recent Appropriations committee allocations. The Budget Resolution did not accommodate the President s full 2010 request. The House Appropriations committee allocation (302b) to the State/Foreign Operations subcommittee is $3.2 billion below the President s request, while the Senate allocation is $3.3 billion below the request. By moving roughly $2 billion forward into the 2009 supplemental appropriation and ensuring the funds remain available for 2010, the Appropriators have made up some of this gap. The President s 2010 request constitutes a 26 percent increase over the final 2008 appropriation. The President has proposed to double US foreign assistance by The 2010 request does not set out the substance of most proposed foreign assistance increases after 2010 by account, nor make 3 This analysis makes three kinds of comparisons: 2010 compared to the 2008 Function 150 budget, compared to the 2009 enacted budget and compared to the 2009 budget including the supplemental. It explains, in each case, the importance of the particular comparison.

4 Budget : International Affairs clear the base year for this commitment. However, if one were to define foreign assistance as Budget Subfunctions 151 and 152, and measure growth from a base year of 2008, the President s request would put foreign assistance on track to double by The proposed budget does not break significant new programmatic ground, but does increase funding for most programs and operations in the International Affairs account, which covers the State Department, USAID, humanitarian assistance, multilateral development banks, and security assistance, across a number of federal departments and agencies. Regional Breakdown Africa would continue to receive the largest share of US foreign assistance in More broadly, however, there has been a long-term shift toward the Near East and South and Central Asia in US foreign assistance. If one combines the 2009 supplemental spending and the 2010 request, the Near East (with increased spending on Iraq, West Bank/Gaza and Israel) would supplant Africa as the highest-funded region. Combining the same two pieces, South and Central Asia, with a focus on Afghanistan and Pakistan, would have the highest rate of growth over 2008, at 115 percent. These three regions (Africa, Near East, South/Central Asia) would receive the bulk of US foreign assistance. Region US Foreign Assistance Regional Breakdown (Budgetary Authority in millions of dollars) 2008 % of % of % of 2010 Africa $7,037 26% $6,373 $288 $6,661 20% $6,738 15% East Asia $768 3% $670 $13 $683 2% $808 2% Europe/Eurasia $1,157 4% $769 $272 $1,041 3% $886 2% Near East $6,336 24% $5,590 $2,367 $7,957 23% $6,609 15% South & Central Asia $3,335 12% $3,058 $2,299 $5,357 16% $4,868 11% Western Hemisphere $2,088 8% $1,992 $420 $2,412 7% $2,367 5% Global/ Undistributed $5,969 22% $7,854 $2,077 $9,931 29% 22,274 50% $26, % $26,306 $7,736 $34, % $44, % Source: Department of State Foreign Operations Congressional Justification Part II Summary Tables (5a, 5b, 5c) and Conference Report Undistributed: The Secretary of State has 45 days after the enactment of the supplemental to submit a report to Congress detailing planned expenditures of appropriated funds. Composition of US Foreign Assistance This analysis recalculates US foreign assistance funding to clarify the balance between assistance programs whose principal objective is development and humanitarian support, programs developed with US strategic and foreign policy interests in mind (though they may provide some development benefits), 4 US foreign assistance programs are defined in this analysis as Budget Subfunctions 151 and 152. These budget subfunctions include all foreign assistance accounts, with the exception of international financial programs.

5 Joseph C. Whitehill 5 and security assistance programs aimed at strengthening non-american military and security forces. 5 The 2010 budget request continues a trend begun in the previous administration toward rapid growth in economic and humanitarian assistance. Such assistance would continue to grow through 2014 in keeping with the President s stated goal of doubling foreign assistance. Policy-driven economic assistance has also significantly increased in the last few years, particularly as a result of operations in South Asia and the Middle East. The 2010 budget would continue this trend with $7.3 billion proposed for the fiscal year. Security assistance, by contrast, appears to remain relatively flat over time. This is misleading, however, since the previous administration funded significant security assistance programs through the Department of Defense (DOD) budget, not International Affairs. The President s budget continues this trend, as discussed below. The administration has yet to come to terms with its expressed commitment to rebalance the departmental relationships in terms of security assistance programs and funding. US International Assistance Funding Objectives and Program Areas The Obama Administration s request indicates that spending on foreign assistance in 2010 would increase across nearly all objectives and program areas. Subdivided by the administration s categories, 5 Economic assistance includes all Budget Subfunction 151 programs, excluding International Narcotics Control and Law Enforcement (INCLE) and Assistance to Europe, Eurasia, and Central Asia (AEECA). The Civilian Stabilization Initiative (CSI) is also included in economic assistance. Policy driven economic assistance is defined here as the Economic Support Funds (ESF) account and AEECA. Security assistance includes programs classified under Subfunction 152, INCLE, and accessed UN peacekeeping (Subfunction 153).

6 Budget : International Affairs economic growth and governance programs would have the highest rate of growth with particular emphasis on agriculture, environment, and the private sector. Much of this growth would be funded through the Economic Support Fund (ESF) account which is oriented toward foreign policy priorities. The only area that would experience a small decrease would be Humanitarian Assistance. The following table summarizes these trends Objectives, Program Areas Summary (dollars in millions) % Program Areas From 2008 to % TOTAL $26,692 $26,306 $4,811 $7,736 $34,043 $32,303 Peace & Security $7,523 $7,955 $843 $9,204 22% Governing Justly &Democratically $2,259 $1,838 $742 $2,814 25% Investing in People $8,573 $9,180 $927 $9,985 17% Health $7,243 $7,918 $115 $8,357 15% Education $929 $926 $27 $1,189 28% Social/Economic Services & Protection for Vulnerable Populations $401 $336 $786 $439 9% Economic Growth $3,279 $2,901 $1,158 $4,689 43% Macroeconomic Foundation for Growth $590 $285 $461 $245 58% Trade & Investment $204 $189 $24 $316 55% Financial Sector $198 $58 $112 $94 53% Infrastructure $946 $559 $280 $953 1% Agriculture $473 $885 $153 $1, % Private Sector Competitiveness Economic Opportunity $388 $428 $100 $698 80% $155 $130 $28 $159 3% Environment $324 $368 $0 $ % Humanitarian Assistance $4,072 $3,336 $887 $3,893 4% Program Support $986 $1,096 $254 $1,718 74% Source: Dept. of State, Congressional Budget Justification, 2010, Summary Tables 09 to 210 5%

7 Joseph C. Whitehill 7 Development Assistance and Health For 2010, the President requested $20 billion for bilateral and multilateral development and humanitarian assistance, and a further $6.5 billion in policy-directed economic assistance through the Economic Support Fund (ESF) account. 6 The budget projects continued out-year growth for these programs. As one component of these increases, the White House announced the President s plan to request $63 billion over six years for global health. 7 The principal highlights of this request are: Overall, economic/humanitarian assistance is slated to double during the timeframe. The rate of growth in global health assistance will slow to an average of 10% annually during the same period, less than half the rate of the prior quinquennium. To meet the $63 billion target in global health spending through Function 150 growth alone would require funding averaging $11 billion annually (exclusive of food aid and water/sanitation) in fiscal years compared to $7.1 billion in US International Economic Assistance The $20 billion for bilateral and multilateral assistance includes all SubFunction 151 except Transition Initiatives, International Narcotics Control and Law Enforcement (INCLE) and administrative expenses. 7 Briefing by White House Press Secretary Robert Gibbs, May 5, Accessed on 6/10/09 at No disaggregation of the announced $63 billion target between Function 150 and other funding is indicated in published materials.

8 Budget : International Affairs State /USAID-managed Economic Assistance Account 2010 Budget : State/ USAID-managed Economic Assistance ($ in millions) ESF $5,181 $4,144 $2,974 $7,118 $6,504 Global Health and Child Survival Development Assistance $6,498 $7,189 $150 $7,339 $7,595 $1,624 $2,000 $0 $2,000 $2,734 AEECA $743 $650 $272 $922 $762 $14,046 $13,983 $3,396 $17,379 $17,595 ESF: Economic Support Fund; AEECA: Assistance for Europe, Eurasia, and Central Asia 2008 to % 17% 68% 3% 25% 2009 to % 3% 37% 17% 1% Policy Driven Economic Assistance The 2010 request for the Economic Support Fund (ESF) is $6.5 billion, a $1,142 million increase over the 2008 level. With nearly $3 billion enacted in the 2009 supplemental, the ESF request appears to be a 9 percent reduction. Besides Afghanistan, Pakistan, and Iraq, the request would also increase funding for several other countries. Spending in Africa would increase by $365 million over 2008, with increases for Liberia, Sudan, Democratic Republic of Congo, and Zimbabwe. In East Asia and Pacific, $98 million is requested for North Korea, contingent upon its denuclearization. There is no ESF request for Indonesia or the Philippines; funding for both is included in the 2010 Development Assistance budget. Economic assistance funding for Europe has been reduced and is concentrated in the Assistance for Europe, Eurasia, and Central Asia (AEECA) account. Georgia did receive $242 million in ESF funding in the 2009 supplemental which would remain available through The 2010 ESF request also includes $178 million for a Global Climate Change Initiative to reduce greenhouse gas emissions, more than tripling the level provided in The 2009 ESF supplemental included $2.973 billion, of which Afghanistan, Pakistan, Iraq, and the West Bank and Gaza account for 80 percent. In addition, the supplemental includes $255 million for developing countries affected by the global financial crisis. The President requested $762 million for AEECA, an increase of $19 million over the enacted level for AEECA appears to decline from the 2009 level by $160 million, but Congress included

9 Joseph C. Whitehill 9 $272 million for Georgia and Kyrgyz Republic in the 2009 supplemental which will remain available in Development Assistance The Development Assistance account would increase by $734 million in 2010 or 37 percent over Development Assistance would increase by $1.11 billion over the 2008 level. Development Assistance spending for agriculture would increase by $577 million, or 355 percent over Environmental programs would increase by $200 million, nearly double the level in Governance programs would increase by $245 million, or 131 percent over In addition, the President is requesting authority to waive restrictions under Sec. 660 of the Foreign Assistance Act regarding police training. Funding for Recurring Humanitarian Relief Programs The President s budget request for humanitarian relief is consistent with his stated principle of fully funding ongoing programs in the base year. The base request for 2010 contains $4.1 billion for humanitarian relief programs, about $470 million more than the 5-year average funding. The request for disaster assistance in 2010 includes $300 million for emergency food security that should provide for more flexible and cost-effective delivery of food-aid. While below the enacted levels for 2008 and 2009, the request would more fully fund recurring program levels than prior years and reduce the need for additional supplemental funding. Account Budget : Humanitarian Relief Programs ($ in millions) MRA $1,338 $1,285 $390 $1,675 $1,480 ERMA $76 $40 $0 $40 $75 Disaster Assistance P.L.480, Food-Aid $670 $550 $270 $820 $880 $2,060 $1,691 $700 $2,391 $1,690 $4,144 $3,566 $1,360 $4,926 $4,125 % From 2008 to % 1% 31% 18% 1% 2009 to % 88% 7% 29% 16% MRA: Migration and Refugee Assistance; ERMA: US Emergence Refugee and Migration Assistance Congress also provided $1.36 billion in 2009 supplemental funding for P.L.480 Food Aid, International Disaster Assistance, and Migration and Refugee Assistance (MRA) to meet urgent

10 Budget : International Affairs humanitarian needs for refugees and internally displaced persons (IDPs), $567 million more that the President s request. The $400 million added by Congress to the P.L.480 program would maintain average spending of more than $2 billion in each of fiscal years 2009 and Security Assistance The State Department has responsibility for a number of programs that assist military forces and other security institutions in other countries. Security assistance accounts include: International Narcotics Control and Law Enforcement (INCLE) and Andean Counterdrug Programs (ACP), Foreign Military Financing (FMF), Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR), International Military Education and Training (IMET), Foreign Military Financing (FMF) and the Pakistan Counterinsurgency Fund (PCCF). The 2010 budget request would increase the resources available to the Secretary for such assistance. Account INCLE & ACP* Budget : Bilateral Security Assistance Programs ($ in millions) to 2010 $1,279 $1,389 $488 $1,877 $1,947 52% FMF $4,719 $4,938 $1,294 $6,232 $5,274 12% NADR $491 $530 $102 $632 $765 56% IMET $85 $91 $2 $93 $110 29% 2009 to % 15% 21% 18% PCCF $0 $0 $700 ** $700 $0 ** - - $6,574 $6,948 $2,586 $9,534 $8,096 23% 15% *The 2010 request consolidates the Andean Counter-drug Program (ACP) with the International Narcotics and Law Enforcement (INCLE) program. **Congress appropriated $1.1 billion in the 09 Supp: $400 m. in DOD and $700 m. in State. $700 m. was requested in DOD for International Narcotics Control and Law Enforcement (INCLE) Funding for INCLE has increased by 52 percent since 2008, indicating the growing importance of counter-narcotics and law enforcement in the Western Hemisphere and in South and Central Asia. The Western Hemisphere would continue to lead all regions in INCLE programming with $889 million. The Mérida Initiative provides $525 million for Mexico and other Central American countries. The request for countries previously funded under the Andean Counter-drug Program would decline by $50 million to $311 million. (In the 2009 supplemental, Mexico also received the largest portion of INCLE funds

11 Joseph C. Whitehill 11 $160 million.) South and Central Asia with Afghanistan and Pakistan would be the second largest region within INCLE with $610 million. Foreign Military Financing (FMF) The FMF programs continues to focus on the Middle East, where countries would benefit from $4.5 billion, or 85 percent, of the total 2010 FMF request of $5.3 billion. Ninety percent of Near East funding would be for Israel and Egypt: $2.77 billion and $1.3 billion respectively. The 2009 supplemental included $965 million of the 2010 budget request for Middle East countries: $150 million for Jordan, $260 million for Egypt, and $555 million for Israel. Those amounts are not in addition to the funds requested for 2010; the 2010 appropriation may be reduced by that amount without affecting program levels for the year. Nonproliferation, Anti-Terrorism, Demining and Related Activities (NADR) The NADR program provides assistance for counter-terrorism, non-proliferation and demining programs. The President is requesting $765 million for NADR in 2010, an increase of $133 million or 21 percent over the 2009 level. Anti-terrorism programs would grow by $157 million while conventional weapons destruction would increase by 32 percent to $163 million. The President is requesting $292 million for non-proliferation programs to support the Nonproliferation and Disarmament Fund and export control/border security assistance. In the 2009 supplemental, Congress also provided $102 million for State s NADR nonproliferation program. Afghanistan, Pakistan, and Iraq These three countries figure prominently in the President s budget request, for both security and policyoriented economic assistance. The 2010 budget would greatly increase resources to Afghanistan and Pakistan, but, reflecting the shift in policy priorities, would reduce funding for Iraq, aside from counternarcotics funding. Most of the assistance would be provided through ESF and INCLE accounts, with responsibility for security assistance handed largely to DOD. (Of the three, only Pakistan would receive FMF funding (See Security Assistance Spending by Other Agencies section). Afghanistan Afghanistan programs would receive $2.8 billion in 2010 from accounts within the International Affairs budget, and have also received $1 billion in supplemental appropriations for Much of the International Affairs budgetary assistance to Afghanistan for 2010 would be through the Economic Support Funds (ESF) account, intended to strengthening the capacity of the Afghan government and counter-narcotics programs.

12 Budget : International Affairs Budget Function Assistance to Afghanistan (Budget authority in millions of dollars) ESF $1,400 $1,187 $861 $2,048 $2,158 IMET $2 $1 $0 $1 $2 INCLE $308 $351 $133 $484 $450 NADR $28 $37 $12* $49 $58 Global Health & Child Survival Development Assistance P.L. 480 Food-Aid $64 $58 $0 $58 $94 $149 $0 $0 $0 $0 $155 $47 $0 $47 $16 Country $2,106 $1,681 $1,006 $2,687 $2,778 % From 2008 to % No Change 46% 107% 47% 100% 90% 32% 2009 to % 100 % 7% 18% 62% No Change 66% 3% Source: State Department, Foreign Operations Congressional Budget Justification, 2010, Part II * Numbers are requested numbers. The Secretary of State has 45 days after the enactment of the supplemental to submit a report to Congress detailing planned expenditures of appropriated funds. Pakistan The President requested $1.6 billion for Pakistan in 2010, more than double the funding in In addition, the administration requested a new Pakistan Counterinsurgency Capabilities Fund (PCCF) for non-economic security assistance, initially funded with $400 million in DOD monies in the 2009 supplemental. This new fund can be used for all non-economic security assistance. In the 2009 supplemental, Congress provided the requested funds to DOD for 2009 (which remain available in 2010), but, provided an additional $700 million for PCCF to the Department of State. Although these funds are in the 2009 supplemental, they are not available until September 30, 2009, making them virtual 2010 funding through State. The combined availability of these ostensible 2009 funds mean, in effect, that total funding available for economic and security assistance to Pakistan will increase in The 2009 supplemental also directs the Secretary of Defense and the Secretary of State to develop a joint plan for transitioning PCCF from the DOD to State in 2010, with the expectation that State will fully execute the program by 2011.

13 Joseph C. Whitehill 13 Budget Function Assistance to Pakistan (Budget authority in millions of dollars) to to 2010 ESF $347 $575 $539 $1,114 $1, % 4% FMF $298 $300 $0 $300 $298 No Change 1% IMET $2 $2 $0* $2 $4 100% INCLE $22 $22 $66 $88 $ % 100% 76% NADR $10 $11 $2* $13 $23 130% 77% PCCF - - $700** $700 $0** - - Global Health & Child Survival $30 $33 $0 $33 $28 7% 15% Development Assistance P.L. 480 Food- Aid $30 $0 $0 $0 $0 $3 $0 $0 $0 $0 Country $742 $943 $1,307 $2,250 $1, % 100% 203% No Change No Change 30% Source: State Department, Foreign Operations Congressional Budget Justification, 2010, Part II *Numbers are requested numbers. The Secretary of State has 45 days after the enactment of the supplemental to submit a report to Congress detailing planned expenditures of appropriated funds. **Congress appropriated $1.1 billion for PCCF in the 09 : $400 m. for DOD and $700 m. for State; $700 m. was requested for PCCF in DOD for In 2010, Pakistan would also receive $298 million in FMF. ESF and Global Health and Child Survival support would total $1.1 billion, nearly 70 percent of it for economic and humanitarian programs. This includes $364 million for education in 2010 more than double the amount provided in The 2009 supplemental allowed some of the ESF to be made available as budget support provided that Pakistan signs in advance a bilateral agreement to assure accountability and oversight. INCLE funding would be used to develop the capacity of Pakistan s law enforcement agencies to manage the internal security of the state and control its borders. Iraq The President requested $500 million for Iraq in 2010, a decrease from prior year funding. This decline reflects the goal of turning over to the government and people of Iraq the responsibility for their own future. Assistance to Iraq would focus largely on strengthening national and local governments and supporting upcoming national elections.

14 Budget : International Affairs Budget Function Assistance to Iraq ($ in millions) ESF $429 $103 $439 $542 $416 Democracy Fund $75 $0 $0 $0 $ to % 100% 2009 to % No Change IMET $0 $0 $2* $2 $2 - No Change INCLE $85 $0 $20 $20 $52 NADR $20 $25 $11* $36 $30 P.L. 480 Food- Aid $24 $0 $0 $0 $0 Country $633 $128 $472 $600 $500 39% 50% 100% 21% 160% 17% No Change 17% Source: State Department, Foreign Operations Congressional Budget Justification, 2010, Part II * Numbers are requested numbers. The Secretary of State has 45 days after the enactment of the supplemental to submit a report to Congress detailing planned expenditures of appropriated funds. Security Assistance Spending by Other Agencies The increase in security assistance available to the Secretary of State does not signal the end of the parallel architecture of economic and security assistance provided through the Department of Defense (DOD). As shown in the table below, the DOD has built up a substantial portfolio of foreign and security assistance programs since These programs fall outside the International Affairs budget and are funded through the DOD.

15 Joseph C. Whitehill 15 DOD Assistance Program Global Train and Equip (Section 1206) Security and Stabilization (Section 1207) Support to Foreign Forces (Section 1208) Department of Defense Security and Foreign Assistance ($ in millions) Similar Program in State/USAID $300* $350 $0 $0 $400 FMF $100* $150 $0 $150 $200 OTI $25** $35 $0 $35 $0 FMF, ESF PCCF $0 $0 $400*** $400 $700 FMF, INCLE Iraq Security Forces Fund Afghanistan Security Forces Fund Cooperative Threat Reduction $3,000 $1,000 $1,000 $2000 $0 FMF, INCLE $2,750 $2,000 $3,607 $5,607 $7,463 FMF, INCLE $426 $433 $0 $433 $404 NADR OHDACA $133 $83 $0 $83 $85 IDFA Coalition Support Fund $1,100 $200 $1,000 $1,200 $1,600 ESF, FMF Lift and Sustain $300 $100 $150 $250 $300 ESF, FMF Commander s Emergency Response Program Counter Terrorism Fellowship Program Combatant Commander s Initiative Fund Drug Interdiction and Counter-drug Activities $1,700 $0 $453 $1,500**** $1,500 OTI, DA, ESF $25 $35 $0 $35 $35 IMET $50 $50 $13 $63 $100 ESF, DA, OTI, S/CRS $1,177 $1,162 $120 $1,282 $1,384 INCLE PCCF: Pakistan Counterinsurgency Capability Fund; OHDACA: Overseas Humanitarian Disaster and Civic Assistance; FMF: Foreign Military Financing; ESF: Economic Support Funds; OTI: Office of Transition Initiatives; DA: Development Assistance; INCLE: International Narcotics Control and Law Enforcement; IDFA: International Disaster and Famine Assistance; IMET: International Military Education and Training; S/CRS: Office of the Coordinator of Reconstruction and Stabilization * 2007 NDAA authorized $300 m. for Section 1206 and $100 m. for Section 1207, part of which will be used in ** 2005 NDAA authorized $25 m. for Section 1208; authority was extended in the 2008 NDAA, part of these funds will be used in *** Congress appropriated $1.1 billion for PCCF in the 09 : $400 m. for DOD available in 09 and $700 m. for State; $700 m. was requested for PCCF from within DOD for **** 2009 NDAA authorized $1.5 billion for CERP for 2009.

16 Budget : International Affairs Multilateral Funding Spending through international organizations and the multilateral development banks (MDBs) would increase in However, multilateral spending as a percentage of the US International Affairs budget continues a gradual long-term downward trend and a shift in emphasis from development to peacekeeping activities. As US International Affairs spending has increased over the last decade, the preponderance of growth has been in funding for bilateral instruments. The President s budget continues these overall trends as illustrated in the following chart: US International Affairs Multilateral Funding Multilateral funding includes assessed contributions to international organizations such as the United Nations, its affiliated agencies, and other global and regional (including inter-american, European, and Pacific) organizations. In addition, the United States is assessed a portion of UN mandated peace support operations. The assessments are the US share of the organizations and peacekeeping missions operating expenses required by treaty. The US makes voluntary contributions to international organizations such as UNICEF and the UN Development Program to further goals shared with other nations. Finally, the US contributes to Multilateral Development Banks such as the World Bank and other regional development banks for lending to developing countries at concessional rates. The chart includes the requested supplemental spending for 2009 but does not include the International Monetary Fund quota increase described below.

17 Joseph C. Whitehill 17 Assessed Contributions CIO funds are assessed contributions to the regular operating budgets of international organizations while CIPA funds are assessed contributions to UN-mandated peacekeeping operations. The President requested $4,093 million in 2010 and supplemental appropriations of $837 million for 2009 for assessed contributions. Congress provided $721 million for CIPA in the 2009 supplemental, $116 million less than the request. This same amount, however, was added the to peacekeeping operations (PKO) account and may be used to pay assessed expenses of international peacekeeping activities in the event of a UN mission deployment to Somalia to replace (or complement) the existing African Union mission Budget : Assessed Contributions to International Organizations and Peacekeeping Activities ($ in millions) Account to to 2010 CIPA $2,064 $1,668 $721 $2,389 $2,296 CIO $1,409 $1,604 $0 $1,604 $1,797 $3,473 $3,272 $721 $3,993 $4,093 11% 28% 18% 4% 12% 3% CIPA: Contributions to International Peacekeeping Activities; CIO: Contributions to International Organizations The 2009 supplemental and the increase in the 2010 budget request are largely for missions in the Democratic Republic of Congo (MONUC), Chad and the Central African Republic (MINURCAT), support for a potential UN mission to replace the African Union mission in Somalia (AMISOM), and other missions in sub-saharan Africa, Timor-Leste and Haiti. The request for 2010 would fully fund US commitments to international organizations and peacekeeping activities and is consistent with the administration s goal of fully funding basic accounts. The request for CIO includes $175 million in 2010 to begin synchronizing the US federal budget cycle with international organizations budget year to permit a more timely payment of our assessed contributions. With the enacted 2009 Bridge Supplemental, the 2009 emergency supplemental for CIPA, and the positive movement in the dollar exchange rate, the request will pay all arrears in assessments built up since the Helms-Biden amendment in Arrears accumulated prior to 1999 would not be affected.

18 Budget : International Affairs The President requested a Buying Power Maintenance account for International Organizations. The new account would recover and re-appropriate a few million dollars each year from expired balances not enough to protect against any future negative movement in exchange rates. Voluntary Contributions The President requested $722 million for voluntary contributions to international organizations and peacekeeping operations, less than the 2009 level but an increase of 100 million, or 16 percent, over The cut in Peacekeeping Operations (PKO) relative to 2009 comes from shifting some operations in the Democratic Republic of Congo and Somalia to CIPA. Also, the multiyear voluntary effort in Liberia is entering its final phase. The Global Peace Operations Initiative (GPOI), an effort began in 2004 to train at least 75,000 peacekeepers mostly from Africa, by 2010 will continue for a second five-year phase at a lower level of funding. The President requested $97 million for GPOI, $9 million less than The request would increase assistance to the Trans-Sahara Counter-Terrorism Partnership to $20 million and provide $13.6 million for two Africa regional initiatives first requested in the 2009 supplemental (East Africa Regional Strategic Initiative and the Africa Conflict Stabilization and Border Security). funding for International Organizations and Programs (IO&P) would be increased by $4 million, however, within the account, funding for the UN Development Program would be cut by $25 million, and funding for the UN High Commissioner for Human Rights would be eliminated. These cuts are offset by increases to the UN Population Fund, the UN Democracy Fund, and others Budget : Voluntary Contributions to International Organizations and Peacekeeping Operations ($ in millions) Account to to 2010 IO&P $310 $353 $0 $353 $357 15% 1% PKO $261 $345 $185 $530 $296 13% 44% IAEA(NADR) $51 $61 $1* $62 $69 35% 11% $622 $759 $186 $945 $722 16% 24% IOP: International Organizations & Programs, PKO: Peacekeeping Operations; IAEA: International Atomic Energy Agency within the Nonproliferation, Anti-Terrorism, Demining, and Related Programs Account

19 Joseph C. Whitehill 19 Multilateral Banks and Debt Restructuring The President is requesting $2.341 billion for the Multilateral Development Banks (MDBs) and $111 million for debt restructuring, an increase of $1.122 billion, or 84 percent over Account 2008 MDBs and Debt Restructuring ($ in millions) to to 2010 MDBs $1,277 $1,493 $2,341 83% 57% Debt Restructuring $54 $60 $ % 85% $1,331 $1,553 $2,452 84% 58% The request would fully fund $1,641 million in scheduled contributions to the MDBs, including new replenishments for the Asian Development Fund and the International Fund for Agricultural Development. The request would fund $100 million of arrears, or amounts cut in past years from scheduled contributions, about 10 percent of the total arrears. In addition, the request includes $600 million for contributions to two new funds to be administered by the World Bank: $500 million for a Clean Technologies Fund and $100 million for a Strategic Climate Fund. The Clean Technology Fund would finance the additional cost of clean technologies over cheaper alternatives while the Strategic Climate Fund would finance low carbon-emitting technologies. Debt Restructuring would increase to $111 million in 2010: $20 million for Tropical Forests and $91 million a contribution to the HIPC Trust Fund and bilateral debt restructuring for the Democratic Republic of the Congo. The 2009 Supplemental requires the Secretary of the Treasury, in consultation with the US Executive Director of the World Bank and the Executive Board of the Fund, to submit a report detailing the steps taken to coordinate the activities of the World Bank and the IMF to avoid the duplication of missions. Seemingly contradictory, the supplemental also requires the Secretary to encourage the IMF to provide $4 billion of concessional loans and grants to low-income countries from Fund resources. Other Subfunction 151 Agencies There are multiple independent agencies and programs that are funded through the International Affairs budget but are separate from the Department of State. Highlighted in this section are some of the larger agencies/programs, including the Millennium Challenge Corporation, the Peace Corps, the Broadcasting Board of Governors and the McGovern-Dole International Food for Education and Child Nutrition Program.

20 Budget : International Affairs 2010 Budget : Other Subfunction 151 Agencies ($ in millions) Account to to 2010 MCC $1,475 $875 $1,425 3% 63% Peace Corps $331 $340 $373 13% 10% McGovern/Dole $99 $100 $ % 100% Other ($36) ($30) ($39) - - $1,869 $1,285 $1,959 5% 52% MCC: Millennium Challenge Corporation Other: Overseas Private Investment Corporation (OPIC); Trade Development Agency (TDA); Inter-American Foundation (IAF); African Development Foundation (AFDF); Treasury Technical Assistance. The Millennium Challenge Corporation (MCC) The Millennium Challenge Corporation (MCC) is unique in the level of recipient participation in identifying and designing the assistance, or development compacts, MCC provides. The President s request would increase funding for MCC by $550 million, or 63 percent, over the level provided in While significant, funding would still be slightly below the level for MCC is asking for $1,193 million to fund three new compacts with Jordan, Malawi, and the Philippines. Including two new compacts they expect to sign in 2009 with Moldova and Senegal, the MCC would have signed 23 compacts through The MCC is asking for $40 million for its Threshold Program to provide assistance to countries that do not yet meet the MCC s eligibility criteria but which the MCC Board deems worthy of assistance. A breakdown of funding is shown below. Program Millennium Challenge Corporation, by Program (in millions of dollars) to to 2010 New Compacts $1,320 $700 $1,193 10% 70% Threshold Country Programs $19 $40 $40 111% No Change Administrative Expenses $87 $95 $98 13% 3% Due Diligence and Audits $60 $37 $95 58% 157% $1,486 $872 $1426 4% 64% Peace Corps, McGovern-Dole and Other Subfunction 151 Agencies The Peace Corps is continuing a multiyear effort to increase the number of volunteers and the countries in which they would serve.

21 Joseph C. Whitehill 21 The President requested $200 million for school feeding programs under the McGovern-Dole International Food for Education and Child Nutrition Program, doubling the funding provided in Other Subfunction 151 agencies include the Overseas Private Investment Corporation (OPIC), Trade Development Agency (TDA), Inter-American Foundation (IAF), African Development Foundation (AFDF), and Treasury Technical Assistance. The negative net total for these other agencies occurs because OPIC s negative outlays are from interest income on its holdings of Treasury securities. Its credit programs do not make money for the government. Expanding Diplomatic and Development Operations Overall the State Department s operating budget has grown substantially during the last decade. However, trends in funding for core diplomacy and international information programs have been comparatively constrained, with staffing demands uniquely related to Iraq, Afghanistan, and their neighboring countries accounting for significant post-9/11 growth. USAID operating fund growth has been limited, as well. The President s budget would substantially grow funding for diplomatic and development operations, with $9.12 billion requested for State s Diplomatic and Consular Programs and Capital Investment Fund accounts, and $1.652 billion in corresponding funding for USAID. The following table summarizes these proposals. Account 2010 Budget : Capacity Building at State and USAID ($ in millions) State, D&CP $6,818 $6,155 $998 $7,153 $8,960 State Capital Investment Fund USAID Operating Expenses USAID Capital Investment Fund $60 $323 $0 $323 $160 $801 $809 $158 $967 $1,439 $87 $74 $49 $123 $213 % From 2008 to % 167% 80% 145% 2009 to % 50% 49% 73% D&CP: Diplomatic and Consular Programs; Source: Department of State Congressional Budget Justification, 2009 Conference Report

22 Budget : International Affairs Specific to Core Diplomacy 8 and International Information Programs (IIP), the President s budget proposes funding increases totaling $711.1 million over 2008 levels. The following graph illustrates the Department s Core Diplomacy and IIP funding proposals against a backdrop of post-cold-war and GWOT-driven trends. State Department Operations Funding, Increasing Core Diplomacy The 2010 request would fully fund State operations in Iraq and Afghanistan as well as growth in core capacity. The 2009 supplemental provided the $336 million for Iraq operations requested in the 2010 budget. Under the request, State would increase both core diplomatic capacity and training capacity by 509 and 633 US Direct-Hire positions respectively. 9 In addition, State would increase support staffing by 60 USDH positions and Diplomatic Security staffing by 440 to a total of 2,759. Enhancing Public Diplomacy Public diplomacy funding would significantly increase under the President s budget. However, the staffing request falls short of ambitious programs outlined by a number of external groups. 8 Core Diplomacy includes diplomatic relations, consular relations, policy formation and multilateral diplomacy, and excludes budget activity sets corresponding to diplomatic security and indirect management/ administrative support. 9 This growth is generally consistent with recommendations of the October 2008 Stimson Center/American Academy of Diplomacy report, A Foreign Affairs Budget for the Future.

23 Joseph C. Whitehill 23 Public Diplomacy ($in millions of dollars) Program to to 2010 Public Diplomacy $361 $399 $4 $403 $520 44% 29% Educational & Cultural Exchanges $501 $538 $0 $538 $633 26% 18% The request would increase staffing by 79 US Direct-Hire positions relative to 2008, contrasting with external recommendations three times as large. Academic and other exchanges would increase by $132 million over Foreign language programming by IIP in Arabic, Chinese, and Persian would be funded in the base request, but no new languages would be added. 10 Managing Foreign Assistance The request for USAID Operating Expenses and Capital Investment Fund total $1,652 million, an increase of $764 million over the 2008 level. 11 The request includes the third year of a multiyear Development Leadership Initiative (DLI) under which USAID will recruit, hire, and train 350 new Foreign Service Officers in USAID workforce US direct hire, DLI, Foreign Service nationals, and other US would increase by 1,478 over the level for All but 85 of these positions would be overseas with the greatest growth in Africa and Latin America. The Capital Investment Fund request for 2010 includes $135 million to relocate three new overseas facilities on new embassy compounds and $78 million to modernize information technology. Staff training in 2010 would, however, remain only $10 million, only half the amount recommended by the Foreign Affairs Budget for the Future report by the American Academy of Diplomacy and Stimson. All operations in Iraq, Afghanistan, Pakistan, and Sudan are included in the base request. 10 The 2010 request provides no funding for American Cultural Centers, Information Resource Centers, or expanding Media Hubs as recommended by Stimson/American Academy of Diplomacy. Binational Centers in Latin America would receive a small increase in funding. 11 This increase is consistent with the Stimson Center/ American Academy of Diplomacy s recommendations.

24 Budget : International Affairs Staffing for Reconstruction and Stabilization Capabilities USAID and the State Department are both involved in stabilization and reconstruction efforts for manmade emergencies through USAID s Office of Transition Initiatives (OTI) and State s Civilian Stabilization Initiative (CSI) through the Office of the Coordinator for Reconstruction and Stabilization (S/CRS). State s civilian response capabilities would expand significantly in 2010 budget with the increase in CSI and the creation of two contingency accounts (the Stabilization Bridge Fund and the Rapid Response Fund). Account 2008 State/ USAID Stabilization & Reconstruction ($ in millions) OTI $45 $50 $0 $50 $126 CSI* $55 $75 $0 $75 $ to % 487% 2009 to % 331% ESF $0 $0 $0 $0 $ $100 $125 $0 $125 $ % 291% OTI: Office of Transition Initiatives; CSI: Civilian Stabilization Initiative; ESF: Economic Support Funds Stabilization Bridge Fund. *Includes funds provided for both State and USAID The State Department is requesting $323 million for the Civilian Stabilization Initiative (CSI) to recruit, train, support, equip, and deploy an interagency Civilian Response Corps for reconstruction and stabilization missions. This request would add another 361 people to the force, on top of the 258 authorized in It would also add ten positions to S/CRS. The request contains language to give the President much larger and highly flexible transfer authority and $40 million for a Stabilization Bridge Fund in the Economic Support Fund. This would significantly increase the funding available for civilian stabilization and reconstruction operations. The budget request would more than double funds for USAID s Office of Transition Initiatives, creating a $76 million Rapid Response Fund to respond quickly to unforeseen events in new and fragile democracies. This authority and funding would parallel the CSI initiative, further expanding the flexibility with which State and USAID can respond to urgent needs in fragile and post-conflict states. Other International Affairs Programs The International Affairs budget also includes funding for public diplomacy activities, such as broadcasting programs and international financial programs (Subfunctions 154 and 155) not specifically